The Social Security (Contributions) (Amendment No. 4) Regulations 2004

• Citation: S.I. 2004/2096
• Sections: 8

Section 1 Citation, commencement and effect

(1) These Regulations may be cited as the Social Security (Contributions) (Amendment No. 4) Regulations 2004 and shall come into force on 1 st September 2004.

(2) These Regulations have effect in relation to—

(a) agreements entered into after 1 st September 2004 which are in respect of post-commencement employment income, and

(b) elections made after that date.

Section 2 Amendments to the Social Security (Contributions) Regulations 2001

The Social Security (Contributions) Regulations 2001 are amended as follows.

Section 3 Amendments to the Social Security (Contributions) Regulations 2001

In regulation 1(2) (interpretation) after the definition of “readily convertible asset” insert—

“relevant employment income” has the meaning given in paragraph 3B(1A) of Schedule 1 to the Act ;

Section 4 Amendments to the Social Security (Contributions) Regulations 2001

In regulation 69 and the heading preceding it (transfer of liability from secondary contributor to employed earner) for “share option gains” substitute “relevant employment income”.

Section 5 Amendments to the Social Security (Contributions) Regulations 2001

In Schedule 2 (calculation of earnings for the purposes of earnings-related contributions) for paragraph 7 substitute—

(7)

(1) The amount of earnings comprised in any payment by way of the conferment of—

(a) a convertible interest in securities;

(b) a restricted interest in securities; or

(c) an interest in convertible or restricted securities,

falling to be taken into account in computing a person’s earnings from employed earner’s employment shall be computed in the same manner, and shall be taken into account at the same time, as applies under Chapters 1 to 5 of Part 7 of ITEPA 2003 , for the purpose of computing his employment income.

This is subject to the following qualification.

(2) For the purpose of sub-paragraph (1) no account shall be taken of any relief obtained under sections 428A or 442A of ITEPA 2003 (relief for secondary Class 1 contributions met by employee).

Section 6 Amendments to the Social Security (Contributions) Regulations 2001

In paragraph 3 of Part 10 of Schedule 3 (payments discharging liability for secondary Class 1 contributions following election under paragraph 3B of Schedule 1 to the Contributions and Benefits Act) for “share option gains” substitute “relevant employment income”.

Section 7 Amendments to the Social Security (Contributions) Regulations 2001

In Part 2 of Schedule 4 (provisions derived from the Income Tax Acts and the Income Tax (Pay As You Earn) Regulations 2003) —

(a) in paragraph 6(3) for “share option gains” substitute “relevant employment income”;

(b) for paragraph 8 and the heading preceding it substitute—

Records where liability transferred from secondary contributor to employed earner: relevant employment income

(8) Where an election has been made for the purposes of paragraph 3B(1) of Schedule 1 to the Act (elections about transfer of liability for secondary contributions in respect of relevant employment income), the secondary contributor shall maintain records containing—

(a) a copy of any such election;

(b) a copy of the notice of approval issued by the Inland Revenue under paragraph 3B(1)(b) of that Schedule;

(c) the name and address of the secondary contributor who has entered into the election;

(d) the name of the employed earner; and

(e) the national insurance number allocated to the employed earner.

(c) in paragraph 21(1)(a) for “a gain” to the end substitute “relevant employment income; and”; and

(d) for the heading preceding paragraph 23 substitute—

Additional return by employer at end of year where liability transferred to employed earner: elections under paragraph 3B(1) of Schedule 1 to the Act.

(e) in paragraph 23(1)(a) for “a gain” to the end substitute “relevant employment income; and”.

Section 8 Amendments to the Social Security (Contributions) Regulations 2001

In Schedule 5 (elections about share option gains)—

(a) in the heading, for “SHARE OPTION GAINS” substitute “SECURITIES OPTIONS, RESTRICTED SECURITIES AND CONVERTIBLE SECURITIES”; and

(b) in paragraph 1(1) for paragraphs (a) and (b) substitute—

(a) details of the securities options, restricted securities and convertible securities to which it relates, or of the period to which it relates, within which these are intended to be awarded or acquired;

(b) a statement that the election relates to relevant employment income arising from the securities or securities options referred to in sub-paragraph (1)(a) on which the employed earner is liable to pay secondary Class 1 contributions under—

(i) in the case of securities options, section 476 of ITEPA 2003 and section 4(4)(a) of the Act ;

(ii) in the case of restricted securities, section 426 of ITEPA 2003 and regulation 22(7) ;

(iii) in the case of convertible securities, section 438 of ITEPA 2003 and regulation 22(7), and

an explanation of the effect of the relevant provision;